Massachusetts Regulator Adds New Detail on HarborOne Conversion Bid

The Massachusetts Division of Banks provided new legal detail Thursday on the Feb. 16 notice by the $1.8 billion HarborOne Credit Union of Brockton, Mass., on its plans to convert to a mutual savings bank this fall.

In a statement issued by the division and released by David Cotney, the commissioner, the agency said the HarborOne proposal to convert to a co-op bank resembles a savings and loan structure.

“A cooperative bank structure corresponds closely to what may be known as a savings and loan association in other states,” said the division in explaining the special and historic nature of Massachusetts law on co-ops dating back to the 1860s.

The proposed conversion and its reliance on quirks in Massachusetts law have been well noted by analysts and conversion advocates, though it was unclear if there are applications elsewhere.

“That law was originally used by merchants to obtain banking services that traditional banks would not offer to them and the assumption is that there is some mutual ownership structure going on in the HarborOne case,” said one analyst who asked for anonymity.

He added, “If HarborOne succeeds, this would be one of the largest cooperative banks in the state since others are in the $200-$500 million range.”

In its latest statement, the Division of Banks said the HarborOne conversion, still subject to member approval, would require further review and approval from the HarborOne board.

“This transaction contemplates changing federal regulatory oversight from the National Credit Union Association to the Federal Deposit Insurance Corporation,” said the statement. “While the Division will review publication notices issued by the credit union, approval by the division is not required for this transaction.”